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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report: May 8, 1995
LEE ENTERPRISES, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 1-6227 42-0823980
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
215 N. Main Street, Davenport, Iowa 52801-1924
(Address of principal executive offices) Zip Code
(319) 383-2100
(Registrant's telephone number, including area code)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its March 31, 1995
current report on Form 8-K as set forth in the pages attached hereto:
(List all such items, financial statements, exhibits or other portions
amended)
ITEM 7 A and B
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned hereunto duly authorized.
LEE ENTERPRISES, INCORPORATED
(Registrant)
By /s/ G. C. Wahlig
G. C. Wahlig Chief Accounting
Officer
Date May 8, 1995
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial statements of the business acquired:
Journal-Star Printing Co.
Financial statements and independent
auditors' report on the financial
statements of Journal-Star Printing Co.
as of September 30, 1994 and for the
year then ended.
Unaudited financial statements of Journal-Star
Printing Co. as of March 31, 1995 and for the
six months ended March 31, 1994 and 1995.
(b) Pro forma financial information of Lee Enterprises,
Incorporated and subsidiaries.
Unaudited pro forma consolidated
statements of income for the year ended
September 30, 1994 and for the six months
ended March 31, 1994 and 1995.
Independent Auditor's Report
To the Board of Directors
Journal-Star Printing Co.
Lincoln, Nebraska
We have audited the accompanying consolidated balance sheet of
Journal-Star Printing Co. and subsidiary as of September 30, 1994 and the
related consolidated statements of income, retained earnings, and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position
of Journal-Star Printing Co. and subsidiary as of September 30, 1994, and
the results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
Davenport, Iowa
October 12, 1994
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Year Ended Six Months
September 30, Ended March 31,
1994 1994 1995
(Unaudited)
Operating revenue:
Newspaper advertising $22,905,212 $11,208,382 $11,766,502
Newspaper circulation 8,021,163 4,036,047 4,193,325
Other 888,831 438,179 781,468
$31,815,206 $15,682,608 $16,741,295
Operating expenses:
Compensation costs $ 9,468,201 $ 4,680,752 $ 4,995,686
Newsprint and ink 4,172,772 2,388,576 2,299,994
Depreciation and amortization 729,944 335,700 468,486
Other 8,704,802 4,317,029 5,322,074
$23,075,719 $11,722,057 $13,086,240
Operating income $ 8,739,487 $ 3,960,551 $ 3,655,055
Financial income 535,226 267,892 207,332
Income before income
taxes $ 9,274,713 $ 4,228,443 $ 3,862,387
Income taxes 3,560,000 1,691,400 1,510,000
Net income $ 5,714,713 $ 2,537,043 $ 2,352,387
Earnings per share, net income $ 952.45 $ 422.84 $ 392.06
See Notes to Consolidated Financial Statements.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31,
September 30, 1995
1994 (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,477,026 $ 657,026
U.S. government securities 5,337,283 9,598,867
Receivables, primarily trade, less allowance
for discounts and doubtful accounts
March 31, 1995 $410,597; September 30,
1994 $395,816 2,709,419 3,117,615
Income tax refund claim - - 386,000
Inventories 737,390 1,024,822
Prepaid expenses 103,975 190,006
Deferred income taxes 266,802 339,273
Total current assets $11,631,895 $15,313,609
LONG-TERM RECEIVABLES AND OTHER ASSETS
U.S. government securities $ 5,326,029 $ - -
Notes receivable 8,955 184,121
Prepaid pension costs 4,309,000 4,620,000
Other 101,925 106,106
$ 9,745,909 $ 4,910,227
PROPERTY AND EQUIPMENT
Land and improvements $ 674,122 $ 667,730
Buildings 6,094,533 5,754,913
Equipment 14,662,822 13,952,658
$21,431,477 $20,375,301
Less accumulated depreciation 13,472,013 11,449,439
$ 7,959,464 $ 8,925,862
$29,337,268 $29,149,698
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,137,501 $ 1,084,234
Accrued expenses 1,007,940 934,389
Dividends payable 1,470,563 469,034
Income taxes payable 375,000 - -
Unearned income 1,484,590 1,617,844
Total current liabilities $ 5,475,594 $ 4,105,501
DEFERRED ITEMS
Income tax credits $ 2,214,570 $ 2,431,940
Retirement plans 199,900 175,700
$ 2,414,470 $ 2,607,640
STOCKHOLDERS' EQUITY
Common stock, par value $100 per share;
authorized and issued 6,000 shares $ 600,000 $ 600,000
Additional paid-in capital 353,354 353,354
Retained earnings 20,493,850 21,483,203
$21,447,204 $22,436,557
$29,337,268 $29,149,698
See Notes to Consolidated Financial Statements.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Six Months
Year Ended Ended March 31,
September 30, 1994 1995
1994 (Unaudited)
Balance, beginning $18,493,700 $18,493,700 $20,493,850
Net income 5,714,713 2,537,043 2,352,387
$24,208,413 $21,030,743 $22,846,237
Cash dividends declared 3,714,563 1,649,092 1,363,034
Balance, ending $20,493,850 $19,381,651 $21,483,203
See Notes to Consolidated Financial Statements.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months
Year Ended Ended March 31,
September 30, 1994 1995
1994 (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 5,714,713 $ 2,537,043 $ 2,352,387
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 729,944 335,700 468,486
Change in assets and
liabilities:
(Increase) in receivables (212,534) (335,207) (735,879)
(Increase) in income tax
refund claim - - - - (386,000)
(Increase) decrease in
inventories 333,986 239,046 (287,432)
(Increase) decrease in
prepaid expenses 49,111 (36,298) (86,031)
Increase (decrease) in
accounts payable and
accrued expenses 686,315 584,129 (126,818)
Increase in unearned income 54,012 79,263 133,254
(Decrease) in income taxes
payable (65,000) (91,600) (375,000)
Deferred items and prepaid
pension costs (354,667) (374,863) (190,301)
Net cash provided by
operating activities $ 6,935,880 $ 2,937,213 $ 766,666
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sale of U.S.
government securities $ 7,411,016 $ 2,946,905 $ 4,774,736
Purchase of U.S. government
securities (5,597,534) (3,074,913) (3,382,608)
Purchase of property and
equipment (4,342,863) (1,410,105) (1,434,884)
Collection and disbursement of
notes receivable, net (4,816) 696 (175,166)
Other 139,857 241,782 (4,181)
Net cash (used in)
investing activities $(2,394,340) $(1,295,635) $ (222,103)
CASH FLOWS FROM FINANCING
ACTIVITIES, cash dividends paid $(3,649,028) $(2,233,043) $(2,364,563)
Net increase (decrease)
in cash and cash
equivalents $ 892,512 $ (591,465) $(1,820,000)
Cash and cash equivalents:
Beginning 1,584,514 1,584,514 2,477,026
Ending $ 2,477,026 $ 993,049 $ 657,026
See Notes to Consolidated Financial Statements.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1995 (Unaudited)
Note 1. Significant Accounting Policies
Principles of consolidation:
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Plattsmouth Journal
Company. All material intercompany items and transactions have
been eliminated in consolidation.
Securities:
Securities are carried at amortized cost which approximates
market value.
Inventories:
Inventories consist of newsprint, printing plates and ink and
are valued at the lower of cost or market. The cost of
newsprint is determined by the last-in, first-out method while
the cost of printing plates and ink is determined by the first-
in, first-out method. The use of the last-in, first-out method
of determining the cost of newsprint inventories had the effect
of decreasing these inventories by approximately $306,000 as of
September 30, 1994, $362,000 as of March 31, 1994, and $435,090
as of March 31, 1995, as compared to what they would have been
under the first-in, first-out method.
Property and equipment:
Property and equipment is carried at cost. Depreciation is
computed primarily by the straight-line method over the
following useful lives:
Years
Land improvements 10-15
Buildings 10-50
Equipment 3-20
Depreciation for the year ended September 30, 1994 and the six
months ended March 31, 1994 and 1995 totaled $729,944, $335,700,
and $468,486, respectively.
Income taxes:
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of
enactment. The Company's temporary differences related
primarily to the allowance for doubtful accounts, property and
equipment, pension costs, and certain accrued expenses.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1995 (Unaudited)
Cash and cash equivalents:
For purposes of reporting cash flows, the Company considers
agreements under repurchase agreements to be cash equivalents.
Securities under repurchase agreements totaled $2,200,000,
none, and $450,000 as of September 30, 1994 and March 31, 1994
and 1995, respectively.
Unaudited financial information:
The unaudited information furnished reflects all adjustments,
consisting of normal recurring accruals, which are, in the
opinion of management, necessary to a fair presentation of the
financial position as of March 31, 1995 and the results of
operations and cash flows for the six-month periods ended
March 31, 1994 and 1995. The results of the six-month periods
are not necessarily indicative of the results of the Company
which may be expected for the entire year.
Note 2. Nature of Business and Transactions with Affiliates
Prior to March 31, 1995, Lee Enterprises, Incorporated and Journal
Limited Partnership owned 49.75% and 50.25%, respectively, of the
Company's outstanding stock. On March 31, 1995 Lee Enterprises,
Incorporated became the 100% owner by acquiring the remaining
50.25% interest from Journal Limited Partnership.
The Company owns and operates two daily newspapers (Monday through
Friday), a combined holiday, Saturday and Sunday newspaper and a
weekly free distribution publication in Lincoln, Nebraska. The
Company's subsidiary owns and operates a weekly newspaper in
Plattsmouth, Nebraska. The Company had historically contracted
the services of Lee Enterprises, Incorporated to furnish the
editorial news content of the daily Lincoln Star newspaper and the
services of Journal Limited Partnership to furnish such content
for the daily Lincoln Journal. Both Lee Enterprises, Incorporated
and Journal Limited Partnership provided editorial content to the
Saturday and Sunday Lincoln - Journal-Star newspaper. The cost of
such services included in operating expenses is as follows:
Year Ended Six Months
September 30, Ended March 31,
1994 1994 1995
(Unaudited)
Compensation costs $2,814,124 $1,428,771 $1,339,423
Other 1,804,625 891,601 1,053,223
Total editorial
fixed fees and
reimbursed costs $4,618,749 $2,320,372 $2,392,646
On March 31, 1995 the Company terminated the editorial contract
with Journal Limited Partnership with a lump sum settlement
payment of $750,000.
The above editorial costs include contractual editorial company
fixed fees paid to Journal Limited Partnership in the amounts of
$788,617, $307,610 and $405,025 and to Lee Enterprises,
Incorporated in the amounts of $749,187, $293,117 and $384,774 for
the year ended September 30, 1994 and the six months ended
March 31, 1994 and 1995, respectively.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1995 (Unaudited)
Lee Enterprises, Incorporated has also been engaged to provide the
Company with certain consultative, managerial and special
services. The cost of these services amounted to $127,088,
$59,669, and $63,419 for the year ended September 30, 1994 and the
six months ended March 31, 1994 and 1995, respectively.
Note 3. Pension and Savings Plan
The Company has a defined benefit pension plan covering
substantially all of its full-time employees, and those part-time
employees eligible under ERISA guidelines, after attainment of
defined age and service requirements. The benefits are based on
the employee's years of service and compensation. The Company's
funding policy is to contribute annually the maximum amount that
can be deducted for federal income tax purposes. Contributions
are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the
future.
The following table sets forth the plan's funded status and the
amounts recognized in the accompanying consolidated statements as
of and for the year ended September 30, 1994.
Actuarial present value of benefit obligation:
Vested benefits $ 5,414,000
Unvested benefits 190,000
Accumulated benefit obligation $ 5,604,000
Projected benefit obligation for services
rendered to date $ 7,069,000
Plan assets at fair value, primarily listed
stocks and units in a fixed income common
trust fund 12,411,000
Plan assets in excess of projected benefit
obligation $ 5,342,000
Unrecognized net gain from past experience
different from that assumed 43,000
Unrecognized prior service costs (82,000)
Unrecognized transition gain as of October 1,
1985 being recognized over 15 years (994,000)
Prepaid pension costs $ 4,309,000
Net pension (credit) includes the following
components:
Service cost - benefits earned during the period $ 304,000
Interest cost on projected benefit obligation 532,000
Actual loss on plan assets 126,000
Net amortization and deferrals (1,563,000)
$ (601,000)
The weighted average discount rate was 8.0%, the rate of increase
in future compensation levels used in determining the actuarial
present value of the projected benefit obligation was 4.5% and the
expected long-term rate of return on assets was 10%.
The Plan has been amended to conform with the provisions set forth
in the Tax Reform Act of 1986 and subsequent legislation through
September 30, 1994.
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1995 (Unaudited)
The Company also has a defined contribution pension plan, which is
qualified under Section 401(k) of the Internal Revenue Code,
covering substantially all of its full-time employees. The
Company matches participant contributions on a dollar-for-dollar
basis up to a maximum of 5% of the participant's salary. The
assets of the plan are maintained in a commingled trust fund under
a common trust agreement. Company contributions to the plan for
the year ended September 30, 1994 and the six months ended
March 31, 1994 and 1995 were approximately $287,000, $143,000 and
$152,000, respectively.
Note 4. Income Tax Matters
Federal and state income taxes consist of the following:
Six Months
Year Ended Ended March 31,
September 30, 1994 1995
1994 (Unaudited)
Federal income taxes
paid or payable for
the current year $2,736,934 $1,437,671 $1,128,242
State income taxes
paid or payable for
the current year 675,833 253,729 236,859
Net (decrease) in
deferred investment
tax credit (8,742) - - - -
Net increase in
deferred income tax
credits 155,975 - - 144,899
$3,560,000 $1,691,400 $1,510,000
Cash payments for income taxes for the year ended September 30,
1994 and the six months ended March 31, 1994 and 1995 were
$3,478,000, $1,783,000, and $2,126,000, respectively.
Income tax expense for the year ended September 30, 1994 and the
six months ended March 31, 1994 and 1995 differs from the amount
computed by applying the statutory U.S. federal income tax rates
to income before income taxes. The reasons for these differences
are as follows:
Six Months
Year Ended Ended March 31,
September 30, 1994 1995
1994 (Unaudited)
Computed "expected" income
tax expense 35.0% 35.0% 35.0%
State income taxes, net
of federal income tax
benefit 5.2 4.4 4.3
Benefit of income taxed at
lower rates (1.0) (1.0) (1.0)
Investment tax (credits) (.1) - - - -
Other, net (.1) 1.6 .7
Effective tax rate 39.0% 40.0% 39.0%
JOURNAL-STAR PRINTING CO.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1995 (Unaudited)
The net deferred tax liability as of September 30, 1994 and
March 31, 1994 and 1995 include the following amounts of deferred
tax assets and liabilities:
March 31,
September 30, 1994 1995
1994 (Unaudited)
Deferred tax liability $2,214,570 $2,214,570 $2,431,940
Deferred tax assets (266,802) (266,802) (339,273)
Net deferred tax
liability $1,947,768 $1,947,768 $2,092,667
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements
presented on the following pages are based on the historical financial
statements of the Company and reflect the pro forma effects of the
acquisition of the remaining 50.25% of the outstanding common stock of
Journal-Star Printing Co. (JSPC) and the issuance of 1,646,643 shares of
its common stock, as described in the accompanying notes.
For purposes of the pro forma statements, the purchase price of the assets
of JSPC has been allocated to the acquired net assets based on information
currently available with regard to the values of such net assets. Pro
forma adjustments have been made only for those assets and liabilities
which, based solely on preliminary estimates may have fair values
significantly different from historical amounts. As such, final
adjustments to recorded amounts may differ significantly from the pro
forma adjustments presented herein.
The unaudited pro forma consolidated statements of income for the year
ended September 30, 1994, and the six months ended March 31, 1994 and 1995
were prepared as if the acquisition had occurred as of the beginning of
the respective periods.
These pro forma financial statements are not necessarily indicative of the
results of operations that might have occurred had the acquisition taken
place at the beginning of the period, or to project the Company's results
of operations at any future date or for any future period. The pro forma
statements should be read in connection with the notes thereto.
LEE ENTERPRISES, INCORPORATED
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Year Ended September 30, 1994
(In Thousands Except Per Share Data)
Historical Purchase
Lee Accounting
Enterprises, Adjustments
Incorporated JSPC JSPC Pro Forma
Operating revenue:
Newspaper:
Advertising $134,322 $ 22,905 $ - - $157,227
Circulation 66,302 8,021 - - 74,323
Other 40,408 889 (2,216) 39,081
Broadcasting 90,000 - - - - 90,000
Media products and
services 61,357 - - - - 61,357
Equity in net income of
associated companies 10,162 - - (2,843) 7,319
$402,551 $ 31,815 $ (5,059) $429,307
Operating expenses:
Compensation costs $138,486 $ 9,468 $ (1,234) $147,020
300
Newsprint and ink 21,744 4,173 - - 25,917
Depreciation 10,916 730 - - 11,646
Amortization of
intangibles 12,580 - - 1,793 14,373
Other 123,348 8,705 (982) 130,282
(789)
$307,074 $ 23,076 $ (912) $329,238
Operating income $ 95,477 $ 8,739 $ (4,147) $100,069
Financial (income)
expense:
Interest expense $ 13,576 $ - - $ - - $ 13,576
Financial (income) (2,984) (536) - - (3,520)
$ 10,592 $ (536) $ - - $ 10,056
Income before
taxes on
income $ 84,885 $ 9,275 $ (4,147) $ 90,013
Income taxes 34,031 3,560 (244) 37,347
Net income $ 50,854 $ 5,715 $ (3,903) $ 52,666
Weighted average number
of shares 23,425 1,647 25,072
Earnings per share $ 2.17 $ 2.10
See Notes to Unaudited Pro Forma Consolidated Statements of Income.
LEE ENTERPRISES, INCORPORATED
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended March 31, 1994
(In Thousands Except Per Share Data)
Historical Purchase
Lee Accounting
Enterprises, Adjustments
Incorporated JSPC JSPC Pro Forma
Operating revenue:
Newspaper:
Advertising $ 65,202 $ 11,209 $ - - $ 76,411
Circulation 32,848 4,036 - - 36,884
Other 19,361 438 (1,105) 18,694
Broadcasting 43,827 - - - - 43,827
Media products and
services 31,072 - - - - 31,072
Equity in net income of
associated companies 4,700 - - (1,262) 3,438
$197,010 $ 15,683 $ (2,367) $210,326
Operating expenses:
Compensation costs $ 68,609 $ 4,681 $ (626) $ 72,814
150
Newsprint and ink 10,715 2,388 - - 13,103
Depreciation 5,332 336 - - 5,668
Amortization of
intangibles 6,333 - - 897 7,230
Other 61,528 4,317 (479) 65,059
(307)
$152,517 $ 11,722 $ (365) $163,874
Operating income $ 44,493 $ 3,961 $ (2,002) $ 46,452
Financial (income)
expense:
Interest expense $ 7,095 $ - - $ - - $ 7,095
Financial (income) (1,249) (267) - - (1,516)
$ 5,846 $ (267) $ - - $ 5,579
Income before
taxes on
income $ 38,647 $ 4,228 $ (2,002) $ 40,873
Income taxes 15,766 1,691 (149) 17,308
Net income $ 22,881 $ 2,537 $ (1,853) $ 23,565
Weighted average number
of shares 23,461 1,647 25,108
Earnings per share $ .98 $ .94
See Notes to Unaudited Pro Forma Consolidated Statements of Income.
LEE ENTERPRISES, INCORPORATED
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended March 31, 1995
(In Thousands Except Per Share Data)
Historical Purchase
Lee Accounting
Enterprises, Adjustments
Incorporated JSPC JSPC Pro Forma
Operating revenue:
Newspaper:
Advertising $ 69,663 $ 11,767 $ - - $ 81,430
Circulation 33,945 4,193 - - 38,138
Other 23,895 781 (1,131) 23,545
Broadcasting 51,068 - - - - 51,068
Media products and
services 28,512 - - - - 28,512
Equity in net income of
associated companies 4,646 - - (1,170) 3,476
$211,729 $ 16,741 $ (2,301) $226,169
Operating expenses:
Compensation costs $ 71,984 $ 4,996 $ (628) $ 76,502
150
Newsprint and ink 13,143 2,300 - - 15,443
Depreciation 5,820 468 - - 6,288
Amortization of
intangibles 6,025 - - 897 6,922
Other 65,324 5,322 (503) 68,130
(405)
(1,608)
$162,296 $ 13,086 $ (2,097) $173,285
Operating income $ 49,433 $ 3,655 $ (204) $ 52,884
Financial (income)
expense:
Interest expense $ 5,920 $ - - $ - - $ 5,920
Financial (income) (1,433) (207) - - (1,640)
$ 4,487 $ (207) $ - - $ 4,280
Income before
taxes on
income $ 44,946 $ 3,862 $ (204) $ 48,604
Income taxes 17,004 1,510 530 19,882
838
Net income $ 27,942 $ 2,352 $ (1,572) $ 28,722
Weighted average number
of shares 22,760 1,647 24,407
Earnings per share $ 1.23 $ 1.18
See Notes to Unaudited Pro Forma Consolidated Statements of Income.
LEE ENTERPRISES, INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
Year Ended Six Month Period
September 30, Ended March 31,
1994 1994 1995
Eliminate the intercompany
management editorial and
consulting fees:
Net decrease in other
newspaper revenue $ (2,216) $ (1,105) $ (1,131)
Net decrease in compensation
costs $ (1,234) $ (626) $ (628)
Net decrease in other operating
expenses $ (982) $ (479) $ (503)
Eliminate the equity in net
income of associated companies $ (2,843) $ (1,262) $ (1,170)
Reduction in pension credit from
overfunded pension plan as a
result of purchase accounting
adjustments $ 300 $ 150 $ 150
Record amortization of intangibles
as follows:
$11,600 of identified intangibles
amortized over 15 years $ 773 $ 387 $ 387
$40,805 of goodwill amortized
over 40 years 1,020 510 510
$ 1,793 $ 897 $ 897
Reduction in fixed cost related to
the cancellation of the Journal
Limited Partnership editorial
contract $ (789) $ (307) $ (405)
Adjust income taxes:
Purchase accounting adjustments
pretax (loss) $ (4,147) $ (2,002) $ (204)
Goodwill amortization 1,020 510 510
Equity in net income of associated
companies 2,843 1,262 1,170
Taxable income (loss) $ (284) $ (230) $ 1,476
Tax effect at 39.5% $ (112) $ (91) $ 583
Eliminate taxes on equity in net
income of affiliated companies (225) (100) (92)
Increase in incremental tax rate
on JSPC's historical operations 93 42 39
$ (244) $ (149) $ 530
LEE ENTERPRISES, INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
Six Month
Period Ended
March 31,
1995
Eliminate the nonrecurring charges
directly attributable to the
transaction:
Payment for termination of the
editorial contract $ (750)
Employee termination, relocation
and reorganization payments
related to the 49.75% ownership
interest (858)
$ (1,608)
Reduction of deferred income taxes
related to the undistributed income
of the 49.75% interest in JSPC. $ 838
Nonrecurring charge and the related
tax effects which result directly
from the transaction and are
included in the Company's net
income are as follows:
49.75% of the contract termination,
termination, relocation and
reorganization payments, net of
related tax benefits $ (745)
Reduction of deferred income taxes
related to the undistributed
income of the 49.75% interest
in JSPC. 838
Increase in net income $ 93
Issuance of additional common stock in connection with the purchase.